Only ear ago, Karl Warden’s path to retirement seemed clear. As the supervisor of a pulp mill in Ottawa, he was earning $80,000 a year and, although only 48, was just seven years from his permanent vacation, funding a well-earned retirement with his company’s defined-benefit pension plan. All that changed last November. “We showed up at work one day and the mill was closed,” says Karl (not his real name). “We gathered for a meeting and w e re told that the mill would be shutting down over the next year. We’d all lose our jobs.”

To make matters worse, the company also announced it would be terminating its pension plan. In its place, each employee would receive a one-time buyout worth the “commuted value” of his or her contributions. In Karl’s case, that amounted to $350,000. In addition, he would receive severance of $95,000, plus a “bridging benefit” of $100,000.

All told, his fare-thee-well package would be worth $545,000 when the plant closed for good.Today, just weeks away from a pink slip, Karl faces the most important investment decision of his life: how to invest his payout to secure his retirement.